Deep technology – a new technology that has made significant advances over the technology currently in use – is attracting unprecedented interest and activity. From 2015 to 2018, the total amount of global private investment in seven deep technology areas studied by the Boston Consulting Group (BCG) and Hello Tomorrow soared to more than 20% per year, reaching nearly $18 billion.
Deep technology is no longer the main research area of people with rich financial or scientific circles. Many trends have led us to recognize significant changes in how to conduct in-depth technical research and how to bring new technologies to market. Innovation is more geographically, functionally and industrially more dispersed and diverse than ever before. Some people think that we are at the beginning of a new cycle, can carry R&D in the next two to three generations, or we may be from the end of a cycle, a "deployment" phase is mainly to build applications, based on existing The beginning of information and communication technology begins with an "installation" phase to construct the infrastructure of new technologies. Clearly, a new deep technology ecosystem is emerging that has a major impact on all participants, especially companies, investors and start-ups.
Two papers previously published by the Boston Consulting Group (BCG) and Hello Tomorrow have examined the business prospects of emerging technologies. (See Boston Consulting Group (BCG) and "Hello Tomorrow, 2017" (Hello Tomorrow, 2017) article "What Deep Tech Startups Want to Get From Corporate Partners" (What Deep-Tech Startups Want from Corporate Partners And the A framework for Deep-Tech Collaboration.) In the past year, BCG and Hello Tomorrow have studied seven areas of in-depth technical endeavor, as well as multiple types of deep technology ecosystems. Role to better understand how companies are developing in today's emerging technologies. These seven areas – advanced materials, artificial intelligence (AI), biotechnology, blockchain, drones and robotics, photonics and electronics, and quantum computing – constitute the most active and promising deep technologies. , covering market applications from early research to full development. Therefore, they provide a representative deep technological picture.
We rely on in-depth interviews, market research, fund review, patent and publication data, and exclusive data from more than 2,000 deep technology start-ups. The final report, The Dawn of The Deep Tech Ecosystem, reviews the evolving ecosystem and provides insight into how different types of participants can maximize their participation value. It examines how companies, investors, and start-ups active in deep technology think about their role in the future. This paper summarizes our findings and conclusions.
In the business context, depth technology has three characteristics. These technologies can have a big impact, take a long time to reach market maturity, and require a lot of capital to develop and expand.
Innovations based on deep technology can generate huge economic value, but their ultimate impact extends far beyond the financial realm and extends into everyday life. Hello tomorrow's analysis of 1646 entrepreneurship, capable of meeting the current global challenges of the year, entrepreneurial competition assessment deep four criteria-technological technology entrepreneurial innovation, business model, team skills, and expected impact-shows these companies are expected to influence a wide range of UN sustainable development Goal (Spain). The most closely watched goals are good health and well-being (51% of start-ups), followed by industry, innovation and infrastructure-related businesses (50%), and mitigating human impact on the environment (sustainable cities and communities) 28%, responsible consumption and production accounted for 25%, climate action accounted for 22%, affordable clean energy accounted for 18%, clean water and sanitation accounted for 10%).
Time and scale
From basic science to techniques that can be applied to actual use cases, deep technology takes time. (In fact, merging a startup is not the beginning of the story, but a milestone in technology development, when science is proven that work begins to target a particular market.) The length of time varies from technology to technology, although it is almost always Longer time than developing innovations based on widely available technologies (consider a new mobile app). Analysis of entrepreneurial hello challenges tomorrow shows that it takes an average of four years to develop technology in biotechnology (1.8 years from consolidation to the first prototype and another 2.2 years to market), while similar figures only have a 2.4-year start blockchain (1.4 years first prototype and 1 year market). The uncertainty is in the technology itself, because every improvement seems to accelerate the next step.
The financing needs of deep technology companies vary by technology. For example, data from the participants of the Hello Tomorrow 's Challenge showed that developing the first prototype in the biotech field averaged nearly $1.3 million, but in the blockchain field it cost only about $200,000. There are several factors that complicate technology investments. One is market risk. Many companies began to seek funding at an early stage of research, much earlier than handing over products and even prototypes to potential customers, meaning that investors have little kpi that can be used to assess attractiveness and market potential. Another complicating factor is technology risk; many investors do not have the in-house expertise needed to accurately assess the potential of emerging technologies.
As a result, deep tech startups rarely follow established funds to develop other types of young tech-enterprises-seeking money from friends and family, then angel investors or seeds, and then increase the valuation of consecutive rounds of venture capital (verified before investors) Decision making), which ultimately leads to the sale or listing of the trade. In the field of deep technology, public funds play an important role in the early stages. Relative to the large capital needs of early research and development, the funds of friends and family are rarely important. Throughout the lifecycle, private and public financing programs are becoming increasingly important to provide financing for deep technology companies, and corporate venture capital (CVC) funds, incubators and accelerators have become common partners because they not only provide funding. , but also provide other key forms of support.
What is driving deep technology?
There are always scientists and entrepreneurs who are enterprising and visionary. What is changing is the ability of these people to acquire technical capabilities, capital and other key resources to bring their dreams into real-life labs and perhaps to the market. The ever-increasing deep-tech ecosystem has facilitated the study of almost any technology, from what we can't see to the concept that relatively few people can explain. This ecosystem is rooted in several trends.
The rise of new platform technology
Innovations over the past few decades have been driven primarily by powerful platform technologies (silicon, desktop, Internet and mobile) that have led to widespread adoption in many industries. Powerful new platform technologies are emerging, paving the way for innovation in the coming decades. It occurs in both software (machine learning), hardware (quantum computing), and biology (gene sequencing and CRISPR-Cas9, which are injecting new life into biotechnology). Their integration enhances their potential and creates the kind of driving force that drives the new industrial revolution.
With the rise of new platform technologies, the barriers have also decreased. Today's innovators have a wealth of technical capabilities. PCs are cheap and powerful, while cloud-based services provide more powerful computing hardware. The convenient use of hardware avoids the huge up-front capital expenditures of technology. Similarly, software is both open source and a widely available service. Computer-aided design, manufacturing, and 3D printing have revolutionized prototyping. In the field of biotechnology, DNA sequencing and synthesis have become standard services.
Business is more dispersed and diverse
Today's innovations are more dispersed and diverse than ever before. In more places, more young companies are pursuing more new ways of inventing, many of which involve advances in new technologies. Our research on seven in-depth technologies found that its range of activities is very broad. For example, in the field of artificial intelligence, we counted more than 1,300 companies in 48 countries and 401 cities. (See Table 1.)
At the same time, big companies are diversifying their innovation projects, using CVCs, incubators and other venture capital tools to acquire new technologies. This report shows that private venture capital participation in CVC increased from 161 in 2015 to 203 in 2018, and the total amount of private venture capital invested in CVC increased from approximately $3.2 billion in 2015 to $5.7 billion in 2018. In addition to the use of CVC, more and more large companies are deploying various innovative investments and developing cars, matching tools (such as time to market) and their goals (such as evaluating new or disruptive technologies, improving existing technologies, Or the control of a new technology).
As a result of the decentralization and diversity of such work, knowledge, skills and information, while more readily available, are more difficult to exploit because they live in increasingly different geographies, industries and functions. This difference is driving the need for new collaborative models in the basic R&D area.
Available capital growth
In recent years, there has been no shortage of venture capital. According to Crunchbase, the value of global risk trading in the third quarter of 2018 is close to $100 billion, an increase of more than 40% from 2017. During this period, the transaction volume also increased by 40%, close to 10,000 rounds.
Startups have the ability to achieve new scientific and commercial success, encouraging investors to inject hundreds of billions of dollars into small businesses. Our research shows that deep technology companies have a lot of financing activities. (See Exhibit 2). In the past five years, both deep tech start-ups and more mature companies have attracted more money than other types of technology companies. Deep technology companies have also completed more financing.
However, some of the available availability of capital must be attributed to macroeconomic conditions – and most importantly, the period of unprecedented low interest rates (or periods of no interest rates) after the 2008 financial crisis seems to be coming to an end. In addition, many believe that the valuation of many technology unicorn companies is already high and is still rising, which is not sustainable. Venture capital, like other types of capital, is cyclical, and we should not be surprised by the fall in the next few years.
Transformation of government role
The role of governments around the world in the support of new technology research and development is changing, and the two largest companies, the United States and China, are moving in the opposite direction. According to the American Association for the Advancement of Science, in the United States, the federal government's spending on research and development as a percentage of GDP fell from more than 1.2% in 1976 to around 0.7% in 2018. In contrast, China's R&D is at a high-speed stage of development. According to the data compiled by The Economist, China’s R&D spending based on purchasing power parity has increased by about 400% over the past 20 years, exceeding $400 billion annually, comparable to Europe and the United States. According to UNESCO data, the total R&D expenditure in the United States is equivalent to 2.7% of GDP, followed by China's 2.1% and the EU's 2.0%.
Deeper issues require in-depth technology
Scientists and entrepreneurs working in in-depth technical work will not retreat because of big problems – or the time and effort spent on solving them. In fact, for many people, these issues are part of the appeal. Mitigating climate change, feeding 8 billion people, and maintaining an aging population, these challenges seem worthy of being put into careers – and attracting large markets such as startups, investors and businesses.
This requires an ecosystem
From research and development to industrialization and commercialization, today's in-depth technology encompasses a wide range of ecosystems, including multiple types of participants, each of which is active in one or more smaller ecosystems. Organized around a specific research, technology, industry or mission. Of course, the business ecosystem is not new, but the deep technological ecosystem is new and operates in emerging markets – so it has not stabilized – technology and industry. Therefore, they are different varieties and traditional companies are difficult to control. Deep technology can also affect the entire value or supply chain, so a more comprehensive analysis of stakeholder interdependencies and value creation models is needed to determine how to align goals, set policies, and interact with others. Newcomers may find themselves in an unfamiliar area, and playing a role can be complicated, but they need to find their own path.
The deep technology ecosystem has a set of characteristics that distinguish it from other business collaborations or partnerships. First, they involve more types of participants from a more diverse source of the public and private sectors, each with its own needs and priorities and making its own contribution. (See Table 3.)
In many ways, startups are at the center of a deep technology ecosystem because they play an important role in accelerating the research, development, and commercialization of new technologies or products, sometimes leading radical innovations to existing businesses. The risk is too great. Their efforts have been assisted by a variety of other actors, and some actors play multiple roles. For example, investors provide funding, but often also provide expertise in corporate development, listing strategies, and high-level engagement. Similarly, corporate partners provide funding and a host of other necessities, the most important of which are access to markets and potential customers. Universities can be important research partners, and facilitators (such as accelerators) often play a key role in helping start-ups develop other necessary relationships.
Deep technology ecosystems are highly dynamic participants that come and go and create new types of relationships that are not always formal, contractual, or well-defined. As emerging technologies or industries grow and mature, the relationships between ecosystem stakeholders are growing. For example, mature start-ups in the commercial phase require less technology, intellectual property, and regulatory expertise than early-stage startups, requiring more visibility and market access. The appeal of different types of partners will also change, as start-ups will shift to different stakeholders over time in order to get the resources they need. For example, in the 2018 "Hello Tomorrow Challenge", the proportion of qualified start-ups seeking corporate partner assistance fell from 38% to 24% during the experimental and commercial phases of product development. The proportion of seeking product distribution assistance rose from 24% to 47%.
In addition, deep technical collaboration relies less on the central coordinator and more on multi-faceted interactions between participants. Even if an ecosystem has a strong participant at the center (usually the one that brings together other parties), very few entities have full control over it. The role of the coordinator is more like a magnet than a management partner. Each partner can influence the overall direction, and alliances between participants can also change the balance of power on key strategic issues. Ecosystem management can be a diplomatic and negotiating activity or a business strategy and direction.
Moreover, although money is an important currency, it is far from the only means of exchange between participants. Knowledge, data, skills, expertise, connections, and market access are also the currencies that connect ecosystem participants. This means that traditional financial metrics, such as income and profit, do not always assess the best way to achieve value. An in-depth technology ecosystem typically involves relationships around non-traditional, indirect, or non-financial connections (for example, involving data or services) that drive companies, start-ups, investors, and others to develop new collaboration and compensation models. Ecosystem participants trade multiple currencies simultaneously.
The win-win rule of the deep science and technology ecosystem
The way each participant treats the ecosystem affects its ability to realize value and its ability to influence others and the whole. Companies, investors, startups and other companies should be strategically guided by three questions about themselves and their goals.
What do we bring to the ecosystem?
Since the ecosystem is a win-win model, each participant needs to consider not only his or her own goals, but also the overall goals and how to help the ecosystem advance a particular technology or market. The answer may be money, data, expertise, market access or other factors. Before realizing personal gain through business applications, all participants need to contribute their own currency and make the ecosystem stronger.
What do we want from the ecosystem?
All participants should be aware of why they are involved in the deep technology ecosystem and what they want to achieve. Of course, one answer to many questions is the ROI, but the goals and their associated timeframes should be as detailed as possible. Participants need to assess the value of implementation from all aspects, not just the financial side. Because the monetization of technology at an early stage is difficult to predict, participants also need to build use cases and assess their potential long-term value before developing a business model.
How do we interact with others to achieve our goals?
Two characteristics of the ecosystem require reconsideration of textbook management techniques, especially for more traditional participants.
First, ecosystems are collaborative—they grow and strengthen through the constant interaction of all stakeholders to achieve a common goal—so the need for collaboration outweighs more traditional competition considerations. A car company and an aerospace company may work with a startup to develop next-generation batteries, but two automakers—startups and a government agency—may also work together because they want the technology to enter the market. Networks play an important role in collaboration because they facilitate the exchange of currencies in different ecosystems.
Second, the outcomes and development paths of the deep science and technology ecosystem are highly uncertain. Any given idea, startup, or emerging technology can succeed or fail. Traditional top-down strategies and R&D project management techniques need to be strengthened by designing methods for managing uncertainty. Different management methods can stimulate, cultivate, and increase the chances of expected results, but they cannot design it. In such an environment, companies and investors should not only consider a single "bet" or "bet". “They need to get involved and nurture the entire ecosystem and look for start-ups or technologies that stand out from the crowd.
Finally, all participants can learn from failure. Many companies will not succeed, which is the essence of deep technology. But they almost always teach some lessons to inform the next action or cooperation.
We are in the early stages of a new deep technology ecosystem paradigm. As new discoveries emerge and technology evolves, participants, roles, and rules will continue to evolve. Perhaps for all potential stakeholders, the first rule is to set goals and get involved. Only then will they be able to learn the lessons – including learning from failures – and harness the power and potential of a win-win ecosystem.